The Federal Reserve is set to meet on May 30th to rewrite some of the Volcker rules that govern the conduct of banks. This has led Weiss ratings to claim that the new banking rules in the US might push people to cryptocurrencies. The agency believes Americans might feel the urge to purchase cryptos as security and they can help ride out any financial crisis.
The Federal Reserve is set to discuss changes of the Volcker rules which stop banks from engaging with volatile markets in hopes of profiting by making use of funds that are protected by the deposit insurance.
The Volcker rules are named after former Federal Reserve chairman Paul Volcker and they restrict banks in the US from making speculative investments that are not benefiting their customers.
As US banking regulators get ready to soften the Volcker rules, Weiss Ratings believe this meeting will be key as it might trigger more Americans to invest in cryptocurrencies as security. In a blog post the company says:
“They want to make it easier for megabanks to take big risks with other people’s money—our money. They want to give banks the green light to trade more of the same kinds of assets that helped cause the 2008 debt crisis,”
Juan Villaverde and Martin Weiss both of Weiss Ratings believe this is a risky move and could lead to the kind of instability that was witnessed in the American financial markets back in 2008. Back then, the banks tried to profit from subprime loans which were a result of “affordable housing for everyone incentive” a law passed in the 90’s.
After the housing bubble burst, banks made major losses and the Federal Reserve had no option but to bail them out.
“Cryptocurrencies do such a fundamentally better job as a safe depository, it’s difficult to envision a world in which this technology does not become a game-changer for money and banking.”
Do you agree with Weiss Ratings on the new Federal rules pushing more Americans to cryptocurrencies? Share your thoughts in the comment section below.